I've been told that if you have unrented real estate, you're entitled in
the USA to deduct from gross income not just the property taxes, the
cost of minimal heating, and maintanance of the vacant propery, but also
the lost rent, that you could have made if it were rented.
This is hard to believe. When I''ve been fired or laid off, can I
deduct from my other income the lost salary I would have gotten if I
were still working?
And even if true, wouldn't it still be better to have rented it? If
corporate income taxes are 50%, like I think they once were, or 20% like
I was told they are now, deducting $1000 of lost rent would save the
taxpaper either 500 or 200 dollars, but renting it would bring in $1000. Doesn't every landlord try diligently to rent their vacant properties?
--
On Wednesday, February 1, 2023 at 1:41:09 PM UTC-5, micky wrote:income when your right to it was fixed and determinable. In that case, a failure to collect the cash would represent a deductible loss (returning you to the same position as the cash basis taxpayer who didn't collect the rent).
I've been told that if you have unrented real estate, you're entitled in
the USA to deduct from gross income not just the property taxes, the
cost of minimal heating, and maintanance of the vacant propery, but also
the lost rent, that you could have made if it were rented.
This is hard to believe. When I''ve been fired or laid off, can I
deduct from my other income the lost salary I would have gotten if I
were still working?
And even if true, wouldn't it still be better to have rented it? If
corporate income taxes are 50%, like I think they once were, or 20% like
I was told they are now, deducting $1000 of lost rent would save the
taxpaper either 500 or 200 dollars, but renting it would bring in $1000.
Doesn't every landlord try diligently to rent their vacant properties?
--
You've been told wrong. If you are a cash basis taxpayer, and most individuals are, you can only deduct expenses you have actually paid. You cannot deduct lost income. On the other hand, if you are an accrual basis taxpayer, you would have reported the
Ira Smilovitz, EA
Leonia, NJ
You've been told wrong. If you are a cash basis taxpayer, and most individuals are, you can only deduct expenses you have actually paid.You cannot deduct lost income. On the other hand, if you are an accrual basis taxpayer, you would have reported the income when your right
to it was fixed and determinable. In that case, a failure to collect the cash would represent a deductible loss (returning you to the same
position as the cash basis taxpayer who didn't collect the rent).
I see. In the case I have in mind, the lease had expired, so there was
no expectation of rent.
Any difference for corporate owner/income tax?
"John Levine" <johnl@taugh.com> wrote:
micky <NONONOmisc07@fmguy.com> said:
You've been told wrong. If you are a cash basis taxpayer, andYou cannot deduct lost income. On the other hand, if you are an
most individuals are, you can only deduct expenses you have
actually paid.
accrual basis taxpayer, you would have reported the income when
your right to it was fixed and determinable. In that case, a
failure to collect the cash would represent a deductible loss
(returning you to the same position as the cash basis taxpayer
who didn't collect the rent).
I see. In the case I have in mind, the lease had expired, so
there was no expectation of rent.
Any difference for corporate owner/income tax?
Well, most corporations do accrual rather than cash accounting,
but it doesn't make any other difference.
Thanks Ira, John. Now the question is whether to tell the friend
who told me otherwise. He might not like being wrong. He's a
retired lawyer, but not tax law and he never owned a business, or
property other than the co-op and later the house he lives in.
But he said this deduction was something people had complained
about for years, as if he knew what I was asking about.
It appears that micky <NONONOmisc07@fmguy.com> said:
You've been told wrong. If you are a cash basis taxpayer, and most individuals are, you can only deduct expenses you have actually paid.You cannot deduct lost income. On the other hand, if you are an accrual basis taxpayer, you would have reported the income when your right
to it was fixed and determinable. In that case, a failure to collect the cash would represent a deductible loss (returning you to the same
position as the cash basis taxpayer who didn't collect the rent).
I see. In the case I have in mind, the lease had expired, so there was
no expectation of rent.
Any difference for corporate owner/income tax?
Well, most corporations do accrual rather than cash accounting, but it >doesn't make any other difference.
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